Banks are working on digital strategies, with few complete solutions as yet
In the European focus markets, Italy leads the way in digitalisation, Germany is on the way and the situation in Spain is still very mixed
What do banks think about digitalisation? What are their goals? What do they regard as the obstacles in their way? GFT posed these questions to banks in several nations.
All the banks surveyed, across all national boundaries, agreed that it is customers who are driving the digitalisation of the financial sector. Customer satisfaction and customer loyalty in an increasingly fierce competitive environment is also high on the agenda with more than 90 per cent consensus. In order to increase their overall attractiveness to customers, the respondents believe that a multi-channel approach (online, mobile, branch) is the most important success factor, ahead of personalised services or choosing the right technology platform.
"Banks are in the process of radically rethinking their strategy," says Marika Lulay, COO and Member of the Executive Board of the GFT Group. "In the past, the product was always at the centre of things. All structures and processes were geared to making new offerings as profitable as possible. This is now changing. Now the customer is taking centre stage, with all their needs and requirements."
"Banks are now focusing on a consistent customer experience - both digital and traditional."
Digitalisation is making it possible: new competitors have woken up the banking industry - from small fintechs to global corporations such as PayPal and Facebook. "In order to enhance the appeal of their own offerings, banks are now focusing on the provision of a consistent customer experience, across both digital and traditional channels. However, they are changing at different speeds," says Lulay. 48 percent of the banks surveyed expect to have fully implemented their digitalisation strategy in three to five years; 36 percent want to be ready in one to two years.
In general, the experts taking part in the survey believe their industry is actively dealing with the topic of digitalisation: 83 percent are working on their strategy or have initiated one or more projects; just over 7 percent already have a full range of offerings available in the market, and just under 10 percent are not yet dealing with the issue. The respondents believe the greatest obstacles are suboptimal organisational structures, the integration of new services into existing infrastructures and a shortage of skilled personnel with digital expertise.
Other trend indicators of the non-representative GFT survey of experts underline the industry's rethinking process. In the three focus countries, Germany, Italy and Spain, decision-makers of nearly all relevant market participants expressed their opinion with similar trends, but also a number of significant differences.
Germany
Just 4 percent are not yet dealing with the issue of digitalisation (compared with 10 percent for the whole survey).
With regard to the milestones already achieved, German institutions have set different priorities than their international competitors:
German banks are well below average with regard to the top 3 priorities: establishment of a digital banking platform (52 percent in Germany versus 59 percent overall); integration of a digital banking solution into the existing infrastructure (44 vs. 55); launch of a mobile payment solution (30 vs. 44).
However, they have also sought far more cooperation with fintech firms than their international competitors: (56 in Germany versus 36 overall), and have more personal finance management offerings (44 vs. 29).
Artur Serra, Executive Director Retail Banking at GFT comments: "Digitalisation is an evolutionary process for German banks across the board. Looking at the obstacles for digitalisation, those surveyed do not regard the lack of standards as a major stumbling block - however, industry analysts believe it is one of the main reasons for the slow adoption of a mobile payment system in Germany."
Italy
Italian banks regard themselves as highly advanced with regard to digitalisation.
Almost two-thirds of the banks surveyed believe that mobile payments is the key success factor for their digital banking portfolio.
Artur Serra comments: "Italian banks are taking a very focused and active approach to the digitalisation of their industry. Banks use feedback from their customers to actively drive their digitalisation strategy and its operational implementation: almost 60 percent already offer a mobile payments system, 14 percentage points higher than the average of all respondents. The Italian market's openness for innovation is also demonstrated by the new digital payment system 'Jiffy' launched by SIA in cooperation with Italian and Spanish GFT experts. Italy's major banking groups have already chosen SIA's P2P solution, which lets users send and receive money in real-time on their smartphone, and they plan to launch it in 2015."
Spain
When responding about key services in the success of the digital banking, the Spanish banking sector placed a high emphasis on real-time decisions. On the other hand, they consider digital platforms much less important.
There is an ambivalence reflected in their budgets for digital projects: 35 percent of the surveyed banks have budgets of less than 5 million US dollars, whilst 18 per cent have budgets of over 20 million US dollars - with both of these extremes leading the way in comparison with the other surveyed countries.
Artur Serra comments: "Most of the Spanish banking sector has already started the Digital Transformation. Spanish banks are showing a high focus on real-time marketing and real-time decisions as a way to evolve their digital platforms."
In summary, Serra draws a positive conclusion from the research findings: "It will still be years before the industry has completed its digital transformation process. But the good news for many banks is that everything is still in a "work in progress" state. The topic must now be tackled systematically. It is also apparent that without sustained rapid investment in IT infrastructures and skilled personnel, future problems are bound to arise, particularly during the implementation process."
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